The trade credit transaction: on buyer–supplier relationship development

Purpose The purpose of this paper is to integrate the trade credit transaction as a generative mechanism into Ring and Van de Ven’s (1994) framework of buyer–supplier relationship development. The purpose is reached by the means of two questions: How can the trade credit transaction be integrated into Ring and Van de Ven’s (1994) framework? Secondly, how can the trade credit transaction be useful to understand relationship development and change? Design/methodology/approach The paper is conceptual in nature. Findings Ring and Van de Ven (1994) argue that buyer–supplier relationships emerge as outcomes of a transaction process comprising three stages: negotiation, commitment and execution. Based on recent developments in process theory, this study develops a framework with the trade credit transaction as a generative mechanism. This generative mechanism explains how actors move forward at each stage and why they move to the next stage in the transaction. The trade credit transaction involve suppliers delivering products first, with payments made 30–60 days later. Originality/value This paper offers three significant contributions. Firstly, relationship development and change are explained by a generative mechanism rather than by single transactions. Secondly, the paper contributes by problematising the starting conditions for buyer-seller relationships and the role of the social matrix. Finally, this paper raises questions about the unit of analysis in studies of buyer–supplier relationship development.